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1Mby1M Incubation Radar 2010: Reftree

Posted on Friday, Jul 2nd 2010

By guest author Praveen Kumar

Reftree is a social network platform with interactive and collaborative Web solutions for enterprise customers. The company’s goal is to enable client organizations to build an interactive Web presence, including community building, which helps in connecting with all stakeholders – prospects, customers, employees, and well-wishers. Reftree provides an array of Web 2.0 applications for interactive marketing communication, recruitment, and knowledge sharing within the community.

Reftree, based in Bangalore, India, was founded in 2007 to build a platform for enterprise social networking with specific applications for customer communication and recruitment. The beta release was in late 2008, and the product was released on the market by the middle of 2009. Reftree is available in both a SaaS model for small and medium enterprises and through on-premises licenses for other customers. It enables customers to roll out a complete interaction and collaboration strategy over the Internet. There are more than forty active customers using the product, primarily through the SaaS model.

CEO Deepak Nakil started his career as a software engineer. He was a member of the founding teams for Trigyn, Tecnova, Visnova, and Lake Systems and a VP in marketing and sales for e-business solutions at Trigyn. He also led Visnova as the CEO and built business around products in the enterprise solutions space.

The popularity of social networks shows how an organization can leverage the social element of buying products and services to make its business processes more effective and competitive. But while large companies can invest in building such interactive platforms, small and medium enterprises have often found it challenging to make such an investment. Reftree felt there was a need to provide an enterprise social networking platform with applications to enable customers to use Web 2.0 effectively.

Nakil’s domain of experience involves working with HP, Trigyn, and Visnova to provide e-business solutions and creating enterprise applications for customers globally. Similarly, he was involved in Internet and enterprise applications for banks, the retail industry, and manufacturing. He was helping a friend to find candidates with the ability to architect a product for development. In a week, he was able to give his friend two people whom he found through a network of people. This is how the company’s concept of business application using social networks, where the base is a network of people with workflows and applications that can use the network, came into being.

At the time Reftree was founded, LinkedIn was used primarily for networking and interaction. The company had not yet rolled out jobs or other applications. There were products such as Jive, Clearvale, Socialtext, Rize, Cubetree, Yammer, and so forth. Cubetree provide features such as microblogging, APIs, blogs, file sharing, and link sharing, while Socialtext has wikis, file sharing, user communities, and dashboards. Jive provide features such as feeds, filesharing, polls, and dashboards. However, most of these companies have generic interactive components such as blogs and forums. Reftree believes that it has a competitive edge over other companies since it provides customers with a comprehensive array of products, such as the Reftree recruitment/intranet solution with employee profiles and directories, end-to-end recruitment management, blogs, forums, polls, news, document collaboration capabilities, task management, and time sheets. Reftree’s business portal solution has features such as referral tracking, events, surveys, direct marketing, and customer service. Its enterprise solution includes features such as comprehensive administration, access control, and combined intranet, recruitment, and marketing solutions.

Reftree’s SaaS revenues come from subscription fees charged to small and medium enterprises, which are now set at $66 per month for the recruitment/intranet solution, $50 per month for the business portal solution, and $77 per month for the enterprise solution. For customization, configuration, and setup, Reftree charges $8 per hour.

Though Reftree’s present focus is the Indian market, it aims to take its products global. Medium-sized companies are a good potential market since approximately the top 10% of companies have recruitment systems already deployed and the bottom 20% are too small to invest in such systems. Reftree targets three different markets for its three products. For the recruitment/intranet solution, the total available market in India comprises IT companies (more than 10,000 companies), ITES/BPO companies (more than 6,000), recruitment companies (more than 800), and other industries (pharmaceuticals, consulting, and healthcare for a total of more than 10,000). Reftree has an addressable market of more than 6,000 IT companies, more than 3,500 ITES/BPO companies, more than 350 recruitment companies, and more than 5,000 companies in the other industries mentioned above.

For Reftree’s business portal solution, the total available market in India includes real estate (more than 1,000 companies), restaurants and hotels (more than 10,000) healthcare and fitness (more than 1,000), educational institutes (more than 20,000), and manufacturing and trading (more than 100,000). Reftree estimates its potential market share at 60% in real estate, 25% in restaurants and hotels, 25% in healthcare and fitness, 50% in educational institutes, and 20% in manufacturing and trading. Finally, for Reftree’s enterprise solution, the total available market comprises about 4,000 medium to large enterprises in diverse segments. Of all these companies, 50% use an Internet strategy in some form or another, for an addressable market of about 2,000 companies.

The company has made an effort to gain traction through personal contacts and references. In 2009, Reftree earned $53,000 in revenue at the cost of $890,000.  But it has projected revenue of $220,000 with a cost $155,000 for 2010. At this point Reftree has about 35 paying customers. However, the company is still injecting funds because it is not yet cash positive.

Reftree is fully self-funded. Toward the end of the second quarter, the company will look to raise money to go into the international market. The ideal investor will be one who understand the space and brings in the global ecosystem to make the product successful.

Nakil has built organizations with team sizes of more than 700 people from the ground up for various businesses, and at present there are product development and product marketing teams. Product development is headed by Gajanan Londhe, who was with Nakil at HP and Trigyn and has significant experience in enterprise scale and Internet applications.

The current growth strategy is to focus more on the corporate segment. Reftree is promoting “Enterprise 2.0 applications” and SaaS as its key differentiators. Also, Reftree plans to establish reference sites and case studies in different industry segments and promote them through the press and online media. Further, the company wants to provide free service to educational institutes, nongovernmental organizations, and social organizations. Other strategies include a trial period for enterprise customers; a free version with limited features; ad-enabled, strategic partnerships with hosting companies, online and conventional marketing agencies, and enterprise product resellers (ERP, CRM, and others); hardware and network vendor brand promotion; extensive use of online and social media marketing; collaborative brand awareness with member companies; and participation in industry-specific events.

At this point, Reftree’s primary objective is to build a sound customer base and make its product pervasive and at the same time look for a strategic buyer or investor who is in a complementary space.

Reftree presented at Sramana’s 1M/1M roundtable on February 11, 2010. The recording of the session is here [36:00–52:00]. Sramana advised Nakil to target the market segment by segment instead of going broad.

This segment is a part in the series : 1Mby1M Incubation Radar 2010

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